Basic Profile & Key Statistics
Mapletree Commercial Trust (MCT) invests in both office and retail properties in Singapore.
Lease Profile
Occupancy is high at 98.2%. WALE is short at 2.6 years where the highest lease expiry of 25.8% falls in FY21/22. Weighted average land lease expiry is slightly long at 76.66 years.
Debt Profile
Gearing ratio, cost of debt, and fixed rate debt are slightly low at 33.7%, 2.6%, and 73.5% respectively. 100% of its debt is unsecured. Interest cover is healthy at 4.1 times. WADE is long at 3.9 years where highest debt maturity of 15% falls in FY22/23.
Diversification Profile
MCT is not diversified in terms of geographical and property. Top geographical and top property contribute 100% and 39.9% respectively. MCT is, however, diversified in terms of tenants, top tenant and top 10 tenants contribute 8.5% and 27.1% respectively.
Key Financial Metrics
Property yield and distribution on capital are low at 4.3% and 2.9% respectively. Management fee is not competitive in which shareholders receive S$6.45 for every dollar paid. Distribution margin of 47.5% is at the moderate level.
Related Parties Shareholding
Sponsor, manager, and directors of REIT manager are holding significant stakes in MCT.
Trend
If we look at pre-COVID, DPU is on uptrend and distribution margin is maintained. NAV per unit is on uptrend.
Fundamental Valuation
| Favorable | Less Favorable |
| Diversified Sector | WALE |
| Occupancy | Top Geographical Contribution |
| Unsecured Debt | Top Property Contribution |
| WADE | Property Yield |
| Well Spread Debt Maturity | Management Fee (Due to Distribution Retention) |
| Top Tenant & Top 10 Tenants Contribution | Distribution on Capital (Due to Distribution Retention) |
| NAV Uptrend |
Without distribution retention, distribution margin would be 59.3% (become 1 of the plus points), where management fees over distribution and distribution on capital would be off from negative points. MCT only provided a business update this quarter, there is no information on COVID impact on income and distribution.
Relative Valuation
i) Average Dividend Yield
Dividend yield of 3.99 % is based on annualized DPU for the past 1 year. Apply annualized DPU of 7.587 cents to average yield of 5.34 % will get S$ 1.42. If we take the DPU without retention, then annualized DPU would be 9.537 cents, which translates into S$ 1.79.
ii) Average Price/NAV
Average value is at 1.13, apply latest NAV of S$1.75 will get S$ 1.98.
Author's Opinion
Everyone can already seen a lot of retail crowd is back. Retail performance is expected to improve. MCT has been performing well all the time and I believe MCT could continue its good performance. For valuation:
i) Fundamental Intrinsic Value = (Removed)
ii) Relative Valuation - Dividend Yield = S$ 1.79
iii) Relative Valuation - Price/NAV = S$ 1.98
At the current price of S$ 1.90, it is slightly undervalued in terms price/NAV relative valuation. However, it is slightly overvalued in terms of dividend yield relative valuation.
*Disclaimer: Materials in this blog are based on my research and opinion which I don't guarantee the accuracy, completeness, and reliability. It should not be taken as financial advice or statement of fact. I shall not be held liable for errors, omissions as well as loss or damage as a result of the use of the material in this blog. Under no circumstances does the information presented on this blog represent a buy, sell, or hold recommendation on any security, please always do your own due diligence before any decision is made.
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